Bank of Canada Might Not Follow Fed When Rates Increase

A hike in interest rates by the U.S. Federal Reserve would not necessarily be followed by a rise in Canadian rates, one of the Canadian central bank's economists suggested on Thursday.

In an appearance before the House of Commons finance committee, economist Rhys Mendes said the Bank of Canada would “not necessarily” raise rates in line with the U.S. central bank. “The bank targets inflation in Canada and decisions regarding monetary policy in Canada would be based on the outlook for inflation," he said.

Mendes gave his assessment to the committee of the health of the Canadian economy in light of low oil prices. He said the Bank of Canada’s move to cut rates in January was a result of the sharp drop in oil prices, which he said was “unambiguously negative for the Canadian economy.” Click here to read more.